Can Alberta put a cap on the oil sands?

Justin Trudeau's approval of Keystone XL pipeline raises questions among green groups over how serious Canada is about tackling its biggest source of CO2 emissions

Justin Trudeau may be styling himself as the anti-Trump climate hero, but his government sees eye to eye with the new US administration on another key climate issue: the Keystone XL pipeline, which will transport Alberta’s carbon-intensive oil sands to the US Gulf Coast, bête noir of North American green groups and ethical investors.

Trump approved Keystone XL in March, overturning the Obama administration’s decision to turn it down for climate reasons, even though the State Department noted in its decision that Keystone XL’s carbon footprint may be even bigger than previously thought, at 21% dirtier than conventional US refinery mix.

The pipeline could still be blocked as the company does not have deals with all the landowners in Nebraska on the proposed route, and lacks a permit in that state. Green groups, meanwhile, are geared up to thwart the project.

“An alliance of indigenous and climate action communities stopped [Keystone XL] before, and we will do it again," Greenpeace Canada climate campaigner Mike Hudema told Canadian Press. “Keystone XL would threaten the drinking water supply of millions of Americans, trample [First Nations] treaty rights and accelerate greenhouse gas emissions on both sides of the Canada/US border," Hudema said. "It’s time for Prime Minister Trudeau to show the climate leadership he promised."

With the third-largest reserves in the world, oil and gas revenues are central to Canada’s economy. Trudeau famously told an audience at a Texas energy conference earlier this year that: “No country would find 173 billion barrels of oil in the ground and leave them there.”

Since taking power in 2015 his Liberal government has also given the green light to a plan to nearly triple the capacity of the Kinder Morgan Trans Mountain project, which takes oil from Alberta to ports in coastal British Columbia, with construction starting this month. It also approved replacement of the Enbridge Line 3 pipeline, doubling the amount of oil carried from the oil sands to the US Midwest.

It’s time for Prime Minister Trudeau to show the climate leadership he promised

The province of Alberta, meanwhile, has been trying to square the circle of its dependence on oil sands revenues, putting an annual 100 megatonnes (MT) limit on oil sands emissions as part of its climate plan and appointing an Oil Sands Advisory Group to monitor compliance. This gives the industry, which emits about 70 MT of greenhouse gases per year, plenty of room to grow while encouraging it to invest in technologies to rein in emissions.

One of the companies that worked with Alberta Premier Rachel Notley on the climate plan is Steve Williams, CEO of Canada’s Suncor Energy, which supports the establishment of a province-wide carbon price and a cap on oil sands emissions. Suncor is a signatory to the Carbon Pricing Leadership Coalition.

In 2016, Suncor, which owns 8.7 billion barrels of oil sands reserves, announced an ambitious new sustainability goal: to reduce the total GHG emissions intensity of its oil and petroleum products by 30% by 2030 compared to 2014, and boost its water conservation efforts.

Suncor is a leading member of the Oil Sands Innovation Alliance, which partnered with Quebec-based GHGSat to launch a satellite into orbit last year to monitor fugitive emissions of methane from oil sands. It is also part of an academic and government consortium testing methods of capturing oil sands emissions.

Suncor also set a 10-year sustainability goal to address its social performance, particularly its relationships with Canada’s First Nations. In 2016 it signed two “historic” partnership agreements with the Fort McKay First Nation and the Mikisew Cree First Nation, making them equity partners in a new synthetic crude terminal that will receive bitumen from the giant Fort Hills oil sands mine.

However, the future of the oil sands, one of the most expensive sources of oil, is under threat. A swathe of multinational energy companies, including Shell, have sold off their oil sands assets as oil prices collapsed from $100 per barrel a couple of years ago to $55, depressed by the rise of cheaper and less carbon intensive shale gas in the US.

How do we transition the energy sector so we aren't locking in additional emissions when we need to be doing the opposite?

Erin Flanagan, director of federal policy at the Pembina Institute environmental thinktank, said Canada faces a “unique challenge” of having 25% of its national emissions coming from the sector. Low oil prices have meant the sector is not expanding, she said, "but when prices go up governments approve projects. The challenge for Canada is: how do we transition the sector so we aren't locking in additional emissions when we need to be doing the opposite."

But she said there has been progress: the Trudeau government is finally moving to regulate fugitive methane emissions from the sector, a major source of greenhouse gas emissions (something the Obama administration successfully brought in in 2016).

Under the Pan-Canadian Framework on Climate Change, oil and gas emissions are subject to the carbon price, and Alberta's cap on oil sands emissions, while giving room for the industry to expand, encourages the industry to innovate "and to see how they can be part of a positive solution". Post-2030, she added, the Pembina Institute is advocating that the ceiling should be progressively ratcheted down.

"Politicians of all stripes would agree we haven't solved [the climate issue] and need to do more as a country," she said. But the days of Greenpeace labelling Canada as a climate criminal for pulling out of the Kyoto agreement are gone. "The steps we've taken are really positive and I hope the world sees that."

Main image: Toma Iczkovits/Greenpeace

This is part of a package of articles on Canada and climate change. See also:

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